Monday, November 21, 2005

The history of modern nation building suggests that the authority of the state must be grounded in the common cultural and ethnic values of its citizens Nationhood, modernity, democracy

Eye on Politics & Taxes: KISSING UP KICKING DOWNHow well do you know your colleagues' personalities? Researchers warn some of them may have psychopathic traits.

But they say this is nothing to be worried about. They will not be violent, but their psychopathic traits will allow them to climb the career ladder, New Scientist magazine reports. Professor Robert Hare, of the University of British Columbia says "corporate psychopaths'" arrogance and focus helps them succeed. They may also be superficially charming, prone to fly into rages and likely to take credit for colleague's achievements. Professor Hare estimates that around one per cent of the population of North America could be described as psychopaths.

Wednesday, November 16, 2005

In its November Tax and Budget Bulletin, the Cato Institute examined the movement in several countries, particularly eastern European countries, toward adopting flat tax systems, which Cato said can attract foreign investment, reduce tax evasion, and make tax systems more fair and efficient.

Taxing Times Catching Up to Global Tax Reforms

President Bush's Advisory Panel on Federal Tax Reform has proposed two plans to modernize the tax system.1 Both plans would take steps to simplify the tax code and reduce taxes on savings and investment. But the plans do not include large enough cuts to top individual or corporate tax rates. Many countries have cut their income tax rates in recent years to attract foreign investment and promote growth. The reforms in Eastern Europe have been particularly dramatic, with many countries adopting flat-rate taxes for individuals. Countries in Europe and elsewhere have also made large cuts to corporate tax rates. In today's competitive global economy, policymakers need to respond to foreign reforms and cut U.S. income tax rates. As a first step, they should consider versions of the Advisory Panel's plans that cut the top individual and corporate rates to at least 25 percent. If such reforms were enacted, it would help America regain its competitive edge and boost investment, wages, and growth.

Flat Tax Revolution Nine nations in Central and Eastern Europe have enacted personal income taxes with single rates and few deductions -- flat taxes. Combined with corporate tax rate cuts, the reforms have spurred economic revival in formerly moribund economies. The table shows that the United States has much higher tax rates than do the flat tax countries, and it has a much higher corporate rate than the average of the 25 European Union nations. The following countries are some of the world's tax reform leaders.2

Hong Kong. Hong Kong has long had one of the world's most efficient tax systems. The corporate income tax has a low 17.5 percent rate. The individual income tax has graduated rates from 2 to 20 percent and various deductions. Alternately, individuals can opt to pay a 16 percent flat tax on a broader base. Individuals are not taxed on dividends or capital gains.

Ireland. Ireland has the second-highest income per capita and the lowest overall tax burden in the EU.3 Its economy has grown rapidly as a result of pro-market reforms including tax cuts, which have attracted large capital inflows. The corporate tax rate is just 12.5 percent.

Estonia. Prime Minister Mart Laar launched the European flat tax revolution in 1994 by instituting a 26 percent tax on individual and corporate income. Estonia is currently phasing down its rate to 20 percent. Another pro-growth change, adopted in 2000, was to exempt corporate retained earnings from tax. Estonia has become a magnet for foreign investment and has enjoyed real annual growth averaging 5.7 percent since 1995.

Lithuania. In 1994 Lithuania cut its corporate tax rate to 29 percent and its top individual rate to 33 percent. In 2002 the corporate rate was cut to 15 percent. In 2005 Lithuania passed a phased-in cut to its top individual rate to 24 percent. The tax rate on dividends is 15 percent.

Latvia. In 1995 Latvia cut its top individual tax rate to 25 percent. The corporate tax rate was reduced from 35 percent in 2001 to 15 percent in 2004. Domestic dividends are exempt from tax.

Hungary. Hungary cut its corporate tax rate to 18 percent in 1995 and reduced it further to 16 percent in 2004. Hungary has a top individual income tax rate of 38 percent, but dividends are taxed at a lower rate.

Russia. In 2001 Russia replaced its individual income tax, which had rates up to 30 percent, with a 13 percent flat tax. In 2002 it cut its corporate tax rate from 35 to 24 percent. Russia's system is not a pure flat tax, as it retains some deductions and narrow provisions. Domestic dividends are taxed at just 9 percent. Russia's tax reforms have been a big success. In recent years, the nation's economy has grown strongly, tax revenues have soared, and tax evasion has fallen.

Serbia. In 2003 Serbia enacted a flat income tax with a 14 percent rate on individuals and corporations. Ukraine. In 2004 Ukraine replaced its individual income tax, which had a top rate of 40 percent, with a 13 percent flat tax. It also cut its corporate tax rate from 30 to 25 percent.

Slovakia. Slovakia adopted a flat rate tax of 19 percent on individuals and corporations in 2004. The top tax rates had been 38 percent and 25 percent, respectively. For individuals, the flat tax has a large basic exemption and few special preferences. Dividends are exempt from tax. Slovakia is attracting large investment inflows from Western Europe, and its economy is growing strongly.

Poland. In 2004 Poland cut its corporate tax rate from 27 to 19 percent. The top individual rate is a high 40 percent, but reforms may be on the way. One party in the new coalition government favors a low-rate flat tax, while the other favors a cut in the top rate to 32 percent.

Georgia. In 2005 Georgia adopted an individual flat tax with a 12 percent rate. The top individual rate had been 20 percent. The corporate tax rate is 20 percent.

Romania. Soon after coming into office last year, Romania's new president issued an edict to replace the nation's income tax with a 16 percent flat tax on individuals and corporations, effective for 2005. The top tax rates had been 40 and 25 percent, respectively.

Recent Developments and Outlook The large benefits of cutting top income tax rates suggest that the trend will continue for some time. Nations are cutting rates to attract investment, reduce tax evasion, and make tax systems more fair and efficient. Here are some recent developments:

Israel is cutting its corporate rate from 34 to 25 percent and its top individual rate from 49 to 44 percent.Greece is cutting its corporate rate cut from 35 to 25 percent and is considering a flat tax for individuals.Austria cut its corporate tax rate from 34 to 25 percent in 2005.Netherlands reduced its corporate tax rate from 34.5 to 31.5 percent in 2005 and is considering further cuts.Germany's new conservative chancellor wants to cut tax rates, but even the former leftist chancellor had planned to cut the corporate rate to boost growth.France is planning to cut its top individual income tax rate from 48 to 40 percent.Belarus is considering adopting a low-rate flat tax, like the one in neighboring Russia.Slovenia's leader plans to enact a flat tax after being inspired by Estonia's success.

The Bush Advisory Panel's proposals would create tax systems with three or four individual rate brackets and top individual and corporate tax rates of 30 percent or more. Those would be only minor tax rate changes compared to some of the reforms enacted abroad. The United States is particularly lagging on corporate tax reform. Ongoing tax cuts have reduced the average corporate rate in the 25 EU countries to just 27 percent. That compares to 40 percent in the United States, based on the federal and average state rate. U.S. policymakers need to wake up to the new global tax realities and put marginal rate cuts front and center in upcoming federal tax reforms.

2 Numerous sources were used for this Bulletin including European Union, "Structures of the Taxation Systems in the EU," 2004; Organization for Economic Cooperation and Development (OECD), various working papers; KPMG, "Corporate Tax Rate Survey," 2004; www.russianeconomy.org; www.freedomandprosperity.org; and news articles from Tax Notes International and www.tax-news.com.

Monday, November 14, 2005

Eye on Politics & Taxes:There Are Too Many Losers in Globalization On globalization's losers: Politicians need to be braver when capitalism is the only game in town

It was pure Fawlty Towers. According to Helmut Kohl, Margaret Thatcher's comment after the Berlin Wall came down was: "We've beaten the Germans twice. Now they're back." If true, this seems a rather perverse response, since Thatcher had spent the 1980s supporting Ronald Reagan in the last big battle of the Cold War, one that resulted in an economically weak Soviet Union being bankrupted by its attempts to keep up with the west in an arms race. Thatcher and Reagan hailed the demolition of the Berlin Wall as the release of millions of people from tyranny

Friday, November 11, 2005

In the middle nineteenth century, Jay Gould's Erie Railroad fought with Commodore Cornelius Vanderbilt's New York Central. In one battle, Vanderbilt lowered the rate for hauling steers from Buffalo to New York from $125 to $100 per carload. Gould counterattacked, lowering Erie's rate to $75. Vanderbilt then went to $50, then Gould to $25. Vanderbilt filled every car when he lowered his rate to a rock bottom one dollar. Unfortunately for the Commodore, the cattle he was carrying were Gould's. Gould had bought up every steer he could find in Buffalo and shipped them on Vanderbilt's railroad. Vanderbilt had made the mistake of believing that his objective was to carry the most beef on the hoof, while Gould didn't lose sight of the real objective - to make money."

Eye on Politics & Taxes: Mikhail Gorbachev on Perestroika, 20 years later Your policies of “perestroika” and “new thinking” on global affairs were announced 20 years ago this summer. How do you evaluate their accomplishments and failures now?

Mikhail Gorbachev, the last president of the Soviet Union, now heads Green Cross International. He spoke with Carlos Gardels and Nathan Gardels July 8 at the Gorbachev Foundation headquarters in a modern bank building on the outskirts of Moscow. In the summer of 1985, he first announced his ideas of “new thinking” and “perestroika.”

Tuesday, November 08, 2005

Diversity means different things to different people and the blogs I read value All People. Diversity is 'otherness' or those qualities that are different from our own and outside the group to which belong. There are many dimensions to diversity such as age, ethnicity, gender and other qualities that can be changed such as marital status, income, educational background, geographical location and work experiences. Diversity means more than just acknowledging or tolerating difference. Diversity is a set of conscious practices that involve appreciating interdependence of cultures. To me diversity means sharing all kinds of stories at Media Dragon. The concept of diversity encompases acceptance and respect. It means understanding that each individual is unique. The whole wide world of the internet is moving beyond simple tolerance to embracing and celebrating the RICH dimensions of diversity contained within each individual. Who could be more diverse than Shel and Robert ;-)

Eye on Politics & Taxes: An Interview with God What would you like to ask God?

The beautiful and powerful presentation that has inspired millions will bring you closer to God

Friday, November 04, 2005

I was trying to think of a way to make the point that this whole war is such a waste. But I also wanted to honor the troops I believe our government wrongly sent to Iraq Luckovich spent 13 hours working on his "Why?" cartoon(Mike Luckovich's Wednesday editorial cartoon has the hand-written name of every American soldier killed in Iraq)

Eye on Politics & Taxes: The Polish autumn The double election victory of the Law & Justice party has left Poland’s leading political actors embracing new friends and old enemies, finds Adam Szostkiewicz.

From Open Democracy, the double election victory of the Law & Justice party has left Poland’s leading political actors embracing new friends and old enemies

Tuesday, November 01, 2005

Is the Prime Minister misusing the Government's Senate majority by rushing to introduce two major pieces of legislation? Emperor Howard

Eye on Politics & Law Lords:Terror defence, or slur? In what is perhaps the most bizarre business idea to spring up since the 9/11 attacks, an American entrepreneur is trying to show that, in the fight against terrorism, the pen is mightier than the sword

An American entrepreneur is trying to show that, in the fight against terrorism, the pen is mightier than the sword